Welcome to your introduction to student debt sundries! The world of student loan can confuse, but when it comes to FedLoan Servicing, we have the answers!
We have compiled answers to the most frequently asked questions we receive from students. A disclaimer that we may have missed certain questions, so contact us and add your own. Now, enjoy and share this extensive but simple list of FedLoan Servicing FAQs.
What is FedLoan Servicing?
The Pennsylvania Higher Education Assistance Agency (PHEAA) founded FedLoan Servicing to assist the U.S. Department of Education in managing federally owned student loans.
It is one of the top three for-profit federal student loan servicing organizations, along with Nelnet and Aidvantage (formerly Navient). Great Lakes Educational Loan Services Inc. was a fourth for-profit provider that existed, but Nelnet purchased it in February 2018.
That they chose this servicer to help oversee the Public Service Loan Forgiveness (PSLF) program set it apart from the other federal student loan servicing firms.
They would transfer federal loans for borrowers to this company if they submitted an Employment Certification form.
What is happening with FedLoan Servicing?
While FedLoan is the only servicer managing PSLF applications at the moment, we expect it will stop managing all federal loans after December 2022. As a result, all federal loans in the FedLoan portfolio will be divided up and given to different servicers. These include:
Furthermore, MOHELA will accept all PSLF-enrolled borrowers. In July, transfers from FedLoan to MOHELA started.
Why did FedLoan Servicing Stop?
FedLoan said that it completely left the student loan business because the loans had become both too expensive and complex.
A follow-up inquiry revealed that FedLoan and the PSLF had a tumultuous history. Its supporters have long accused the organization of mismanaging the program, which has prompted congressional investigations and legal action.
Moreover, even though many borrowers were eligible for student debt forgiveness under the new PSLF waiver, FedLoan had been incorrectly denying them for PSLF.
FedLoan cited the Department of Education’s lack of direction as the cause. It added that until the Department of Education revised its servicing contract with the agency, it could not proceed with processing the updated PSLF requirements.
When will all loans be transferred from FedLoan?
PHEAA affirmed in a statement that it will continue to move customer accounts to new loan servicers prior to December 2022. Prior to that date, all loans must be successfully transferred from PHEAA to other servicers under the terms of this contract extension.
Then, your previous servicer will inform you when there is a loan servicing transfer. After that, you will work with the new servicer to manage payments. All service providers essentially offer the same options and plans. Customer service, however, might vary from one company to another.
You will be given instructions on how to access your account through the servicing portal, set up autopay, and sign up for email-only notifications when your loan transfers. Even if you already had these capabilities enabled with FedLoan, you will need to enable them once more through your new servicer.
Unless you take action to change loan servicers, you will probably stay with the one that was assigned to you.
Who is replacing FedLoan?
We believe MOHELA may be the organization that takes over management of the PSLF program from FedLoan because MOHELA uses the COMPASS™ system created by FedLoan’s parent company PHEAA and also uses PHEAA subsidiary AES as a backup servicer.
FedLoan agreed to continue servicing federal student loans for one additional year as of October 2021.
My student loans are transferred. What should I expect?
To let you know about the transfer, FedLoan will send you a letter or an email. After the new receiver gets your loans, you will get a welcome letter from the new servicer. This message will tell you how to get in touch with the new servicer and what steps you might need to take.
To your new servicer, FedLoan will provide all of your loan information. However, you might only access online data from the time your new loan servicer took over servicing of your loans.
The good news is that the conditions of your loans will not change. Together with your new loan servicer, FedLoan will make sure that it applies all payments you make during the transfer procedure to your loan account.
Will FedLoan remove late payment?
The short answer is yes. The long answer is: If the information on your credit report is inaccurate, FedLoan will erase late student loan payments.
You can register a dispute with each credit bureau that displays the inaccurate, negative information on your credit reports if the negative item is untrue. They must look into the situation right away under the Fair Credit Reporting Act.
If you are really behind on your payments, get in touch with FedLoan right away and plan to catch up so you can get back up to speed.
Do you have the resources to pay back your debt but simply have a bad habit of skipping payments? If so, pay your bills on time and enroll in autopay to avoid missing any future payments.
If your loan payments are timely but you still believe FedLoan is misrepresenting your payment status, you can lodge a complaint with the company. Follow these steps:
- Download and print a FedLoan credit dispute form.
- Complete the form. You will require data regarding your dispute, like your Social Security number and student loan account number. Keep a copy of the form that has been filled out for your records.
- Send the form by mail to FedLoan’s address.
Include any supporting documentation, such as a copy of the credit report from the credit reporting agencies, when submitting your payment history dispute. Otherwise, you can complain to the Consumer Financial Protection Bureau (CFPB) if you do not get a response to your disagreement in a timely manner.
Should I worry about FedLoan closing?
You do not have to panic or worry about FedLoan closing and that you have to change your loan servicer.
The National Student Loan Data System (NSLDS) files available on studentaid.gov keep track of your contributions and forgiveness credits. Actually, FedLoan extracts information from this database. It occasionally commits errors, which is fixable by filing a complaint with the CFPB or sending a letter to your senator or congressperson.
One of the best ways to get rid of your debt is to pocket some scholarships to pay off student loans. You can apply this extra money to your student loans and write off many dollars each year from your loan balance.
Consolidating your federal student loans should be your next course of action. Even if filling out the Free Application for Federal Student Aid (FAFSA) and combining your federal student loans will not help you pay less each month, they do at least make it possible for you to manage your money.
We would love to see this FedLoan Servicing FAQs create a dialogue among students. Please leave a comment if you have questions. Alternatively, you can get in touch with us, and we would be pleased to speak with you and do our best to respond!